Correlation Between Deswell Industries and Sanmina
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and Sanmina at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Deswell Industries and Sanmina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and Sanmina, you can compare the effects of market volatilities on Deswell Industries and Sanmina and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Deswell Industries with a short position of Sanmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and Sanmina.
Diversification Opportunities for Deswell Industries and Sanmina
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deswell and Sanmina is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Sanmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanmina and Deswell Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Deswell Industries are associated (or correlated) with Sanmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanmina has no effect on the direction of Deswell Industries i.e., Deswell Industries and Sanmina go up and down completely randomly.
Pair Corralation between Deswell Industries and Sanmina
Given the investment horizon of 90 days Deswell Industries is expected to under-perform the Sanmina. But the stock apears to be less risky and, when comparing its historical volatility, Deswell Industries is 1.82 times less risky than Sanmina. The stock trades about -0.01 of its potential returns per unit of risk. The Sanmina is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 7,547 in Sanmina on November 3, 2024 and sell it today you would earn a total of 826.00 from holding Sanmina or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. Sanmina
Performance |
| Timeline |
| Deswell Industries |
| Sanmina |
Deswell Industries and Sanmina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and Sanmina
The main advantage of trading using opposite Deswell Industries and Sanmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, Sanmina can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sanmina will offset losses from the drop in Sanmina's long position.| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. SigmaTron International | Deswell Industries vs. Daktronics |
| Sanmina vs. Benchmark Electronics | Sanmina vs. Methode Electronics | Sanmina vs. OSI Systems | Sanmina vs. Celestica |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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